InfiniteBanking.org is a website run by Nelson Nash, who wants to educate you on “becoming your own banker” by using whole life insurance policies to finance your major purchases (house, car, etc.), rather than the traditional method of borrowing money from a bank which you then have to pay back with interest.

Whole life insurance policies are a combination of life insurance and forced savings policies – the “forced savings” part meaning that part of your premiums are invested and bring you a small return. The specific attribute of whole life insurance policies that the Infinite Banking system is focusing on, however, is the fact that you can borrow money from this policy.

Infinite Banking claims that investing in a whole life insurance policy and then using it as a source to borrow money from rather than borrowing from a traditional bank will save you the money you pay in interest over the course of your life, which could obviously add up.

To be clear, Infinite Banking is not a system that claims to make you money, rather they say that their system will save you money. Also, they are not advocating that whole life insurance is a superior policy to term life insurance in the terms of payouts after you pass – their theory is that it is more important to have access to the money you pay into life insurance while you’re alive, rather than to have a large sum paid out after you die.

Understanding the workings of a whole life insurance policy is difficult, and Infinite Banking and Nelson Nash credit this by saying you may have to read through their text Becoming Your Own Banker multiple times before you truly understand how to utilize their system. This seems fair, as a quick skim of financial articles discussing term life insurance policies versus whole life insurance policies has enough numbers, percentages, and sample scenarios to make your head spin.

While the Infinite Banking system doesn’t seem to be for the faint of heart, there are advocates out there who say people without a lot of credit card debt and who have 5-7 years to invest in their policy before borrowing money from it might be able to benefit from this program.

This is a very fair review. I am an authorized practitioner of IBC and searchable on the official website. Everything written in the main review is 100% true.

I have been using it personally for many years and I’ve steered a number of my clients into the strategy as well. In 6 years time, I’ve received 0 calls from unhappy clients about their decision to capitalize an Infinite Banking style policy.

Not every life insurance policy I write is suitable for IBC, as there are very few policy builds that actually are, but for that specific needs with clear expectations laid out up front, it’s a big win for those who capitalize and use it properly.

I like the concept of using the cash value of what will eventually be tax free insurance proceeds to finance current financial requirements, but it begs a couple of questions. First of all I am suspicious of the cash value and enhanced value of the insurance. With today’s low rates of return, how does it accumulate enough cash value to actually outstrip the paid-in value of the policy while at the same time is able to increase the overall value of the insurance proceeds?
The concept sounds wonderful,(a little too good to be true) I just find it difficult to believe that it can produce the returns suggested. I would need a thorough education to validate this.
The other question regards access. I gather than there would be some amount of cash value in the policy after the first year, which would then be available to borrow against. I also gather that it would take several years before there was enough value to be able to significantly borrow against it. Offsetting ones’ mortgage would take quite a few years to be able to substitute an insurance loan for a large home owner’s loan, unless I missed something.

Dino, YES it is worth running money through this system!! When you purchase real estate, you either either finance (paying interest to a bank etc.) or you pay cash (surrendering the potential to earn interest on your cash). Either way this costs you money. Your cash value is earning dividends and is always accessible. It would be most profitable to purchase the real estate with funds loaned from your cash value, leveraging one investment with another. Your cash value will still compound interest/dividends as if the loan never happened. This allows the remaining funds to grow at an always accelerating rate.

Example: you have $100,000 cash value that earns 5% dividends annually. 5% serves as a benchmark; you have found a real estate opportunity that will provide a 10% return-the cost is $90,000. Let’s also say you can take a loan against your cash value at a 3% interest rate to the insurance company.

It would be most advantageous to finance the purchase with money that earns 5% and can be repaid at 3%. Essentially you earned 2% to finance an investment that will pay you 10%-you just made a 12% return.

From the proceeds of the real estate you should repay your loan to the insurance company to fully reimburse your cash value. This makes you eligible for round two; or tax free retirement. Now you win on two fronts.

I hope this makes sense. I am an advisor, My number is (304)851-1888. Feel free to contact me if you wish to discuss this in further detail.

Korey

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autumn says:

January 20th, 2015 at 12:24 am

I just met an insurance agent with infinite banking concept, as the illustration shows, 20k per year for 10 years, i will have about $200K to borrow with 4-6% interest rate. If i borrow the bank, i can borrow more with lower rate if using my house for colateral. What is good for infinite banking?

The money you borrow is from the Life Insurance Company. Your cash value still growths as if no loan was taken out. The 4-6% interest you mentioned grows tax free. All you have to do is call the Insurance Company for a loan no paper work or underwriting won’t get turned down. You should pay the loan back but the terms are up to you. The principal goes back to available cash value and any interest over that of what is charged by the Life Insurance Company goes to available cash value as well.

The equity in your home does not grow unless the price of your home rises in value it can also go the other way. The interest on your mortgage payment is gone for good to the bank. Your paying yourself back on a policy loan. The interest rate earned on the policy can be greater than the interest on the loan. You can always pay a higher interest rate to yourself.

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Eileen says:

June 1st, 2013 at 2:40 pm

I am not sure I totally agree with the statement that it works only for people without credit card debt. If structured correctly, it will help you retire your credit card debt a lot more cheaply and faster than trying to pay it down with the credit card company. This does not mean that you can continue to spend at the rate at which you accumulated the credit card debt, but given sufficient financial discipline, owing money on credit cards should not be a deterrent to at least investigate it as a way of paying it down with less interest in terms that are more favorable to you.

Where I see a lot of benefit is that small business owners who are on a shoestring budget for growing their business can use their infinite banking policy instead of credit cards (which is what I did) to invest in their business. It is also a good place to put your retirement account funds (warning – PAY your taxes before putting your retirement funds into the policy) because retirement accounts place too many restrictions on how you can use the money.

This program works even for college students , I started my policy a year ago., and have used my cash value policy to go to school several times, any time I need cash I call up the insurance broker and borrow my cash, as long as I pay back the money I can alway rely on that money to be my stimulace package.

Doug: I guess you are too old to realize that younger generations rely on spell check, which doesn’t make them uneducated. If I spent all my tuition money to learn spelling, I would be pretty pissed off. Stop being a cranky old hater.

Doug says:September 8th, 2013 at 10:03 am

Are you really going to college, Matthew?
They didn’t teach you how to spell “stimulus?” Get your money back from the damned college…you are wasting your time and money!!!

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John says:

January 6th, 2013 at 11:32 am

Let the “experts” try to shoot holes all day. Once you’ve grasped the concept and have actually implemented it, you could never appreciate it. My policy is going on 3 years and it’s bailed me out many many times. In fact my credit score (as if I care) shot from 604 to 813 because I only use credit cards for living expenses for the points-back and always pay back. AND if I ever get in a pinch I never pay a penny of interest, I simply borrow from my Policy, pay my card, then pay my Policy loan back with the interest (my choice!) I WOULD have paid the credit card company. In the meantime the money I borrowed out is STILL earning interest as if I never borrowed out! So I’m not only recapturing interest I WOULD have paid, I get interest on borrowed money! How’s that for turning the tables? I did it. I do it. It works.

Don’t be misled or confused between borrowing from the cash value of your policy and taking a policy loan. This is where the integrity of the policy is not compromised at all. It continues growing, paying dividends and/or purchasing paid up additions.The cash value is only used as collateral for the loan. (tax free I might add)

From my understanding the Insurance Company will track the premiums to ensure that you remain under the MEC. If it looks like you are over they will refund the difference with interest. You will have to pay taxes on the interest of the refund. Your account though will not be affected. If you do not respond in the 60 days of notification to allow the Insurance company to refund then your account could be labeled a MEC.

Also it is a 7 year test. So you could potentially over fund in the early years and reduce towards the end of the sliding period. It is also my understanding that the PAD rider as it increases the insurance level also increases the MEC threshold. I am not certain of this… I hope to find out this weekend.

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Amanda says:

January 18th, 2012 at 5:03 pm

I would like to know if anyone out there can guide me in choosing a mentor for IBC. I think the plan can work, but someone with less THOROUGH understanding of IBC and a whole life insurance policy needs someone to help prevent MEC-ing or exceeding the amount you can put in the policy after a certain point.

I know there is a local agent that consults and sells these policies for infinite banking, but how can you choose an honest one?

I can truly appreciate your concerns. And unfortunately in this day and age, they are certainly justified. But I would more than welcome the opportunity to try and address any of your questions and/or concerns.

I’ve been in the Financial Services Industry for nearly 25yrs and have worked extensively in the Life Insurance Arena as well as IBC. I can confidently say that of structured properly, it is clearly one of the most unique and powerful resources available to help maximize the use of your money, protect against the volatility and the uncertainty in the market and provide a long-term financing tool.

the concept is good. But the dependancy/ control is back to the banks. This concept will NOT work if the banks raise interest rates on these types of loans and/or make it articifially difficult to access the cash value inside the policies.

when banks have liquidity issues,it has been proven that they refuse to lend out these CSV loans………..the money then gets stuck inside a life policy !!

What are you talking about? The policy isn’t with a bank, it’s with an insurance company. As owner of the policy, you take the loans when you request them. You cannot be denied, because you own the policy.

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Leigh says:

December 21st, 2011 at 8:30 pm

Infinite banking has changed our future exponentially. As we borrow from our policies, pay them back with interest, we watch our cash value and death benefit grow. We borrow from our policy and faithfully pay it back as we would if we borrowed the money from a conventional bank, our money grows. It has allowed us to live at a higher standard and not worry about retirement. No scam here. After studying this concept and now practicing it, we have made a shift in our basic understanding of how to use and grow wealth.

I attended a seminar in Columbia, SC and the information presented was clear, concise, and noteworthy. The host shared in detail the workings of Infinite Bank/Becoming Your Own Bank and answered many questions from the audience.

I have a friend who set up a whole life insurance policy which incorporated the Infinite Bank idea and he seems very happy with his (individual) results. The idea is worth looking into and as an MBA graduate, I like what I see thus far.

To anonymous let me just say that I met Nelson Nash in 1997 when the Infinite Banking Concept was very new and fresh. I have been friends with Nelson ever since and have used this concept for years. This is really not rocket science. Banks make money on the spread between the cost of storing other people’s money and what they charge to lend it. One can borrow money for a low cost from the insurance policy and pay back the loan at the going lending rate. The money from the spread goes to increase the cash value of the policy. Insurance policies are designed to become increasingly more efficient over time which is why they are a great long term repository for money. There are many of us agents out there who are very qualified to help folks use this concept successfully. Anyone who calls this a scam is quite simply misinformed and does not understand banking.

I find it interesting as I have read several blogs on “Is infinite banking a scam?”, that I haven’t heard of anyone who has actually used the process, complain about it or say it was a scam. I would love someone to point me in that direction. It would be nice if we could base our comments on facts and not conventional wisdom or emotions.

I received the book BECOMING YOUR OWN BANKER BY R. Nelson Nash and included with it was also an adviser’s contact info. His book has examples of specific plans & uses that give a good picture of the workings of the INFINITE BANKING CONCEPT.

Infinite banking is growing and helping a lot of people, so that shows it is not a scam, But a lot of people get themselves into trouble by not knowing what they are doing. They need to educate themselves before getting started.